Nifty 500: A Tentative Rebound Within a Consolidation Phase
Recent price action establishes a tentative higher low, yet overhead resistance persists. Investors await a follow-through after Friday's gain to confirm if the consolidation phase is truly over.
Indian equities closed the week on a steady note. After a volatile start, broader markets bounced back strongly on Friday and recovered most of the week’s losses.
Key Indices Performance:
Key Drivers This Week
Currency watch: The Indian Rupee came under pressure and hit record lows mid-week. Supportive steps from the RBI and a softer US Dollar helped the rupee recover slightly.
Global signals: US inflation data came in lower than expected. This raised hopes of rate cuts by the Federal Reserve in early 2026 and led to a broad rally in global markets.
FII flows stabilizing: FIIs were strong sellers in the first half of the week, continuing the trend seen since early December. Toward the end of the week, they turned marginal buyers. DIIs stayed steady buyers.
BoJ rate hike impact: A rate hike by the Bank of Japan makes yen borrowing more expensive and reduces the appeal of ‘carry trades’. This can cause short-term FII outflows, higher volatility, and some pressure on Indian stocks. Over the medium term, the impact is expected to be limited, as Japanese rates (0.75% after the hike) are still low and strong domestic growth and local flows provide support.
Technical Perspective
Nifty 500 trend: The daily timeframe chart shows Nifty500 in a short‑term corrective phase within a still‑intact longer‑term uptrend, with price oscillating around the 20EMA and 50EMA. It is forming lower highs and mixed higher‑low/ lower‑low structures that point to consolidation rather than a confirmed top. The recent ‘lower high - lower low’ seen on the daily chart appears as a minor correction on the weekly timeframe rather than a total trend breakdown.
The price is hovering right around 50EMA, indicating a battle between bulls and bears for short-term control. Just like previous week, it broke below its short-term key moving averages (20EMA and 50EMA), but managed to close above them as the week ended.
Recent momentum: There has been a recent pullback followed by a recovery attempt. This suggests that buyers are stepping in near short-term support zones (see image below).
The medium-term trend is currently in a consolidation phase. After reaching a 52-week high near 24,035, Nifty500 has faced some resistance and is moving in a range. For Nifty500, breaking and sustaining above the 24,035 (52-week high) is crucial for the next leg of the bull run.
The reason we track Nifty500 is because it represents over 90% of the free float market capitalization, making it a comprehensive barometer of market health.
Nifty500’s 10EMA crossed under its 20EMA on 8th December triggering a ‘Curtail’ signal that suggests curtailing onto existing long positions.
As of December 19, 2025, about 41%, 27% and 25% of stocks are above their 10EMA, 30EMA, and 50EMA respectively. Last week, these readings were similar, indicating not much change in market breadth this week.
The short-term and medium-term structural stability across the board remains weak, with only 25% of stocks still trading below their 30EMA and 50EMA.
The market breadth readings remain below the midpoint (50% mark), signaling that the majority of stocks are trading below short-to-medium-term trend levels, which is typically a corrective sign for the broader market.
It’s important to note that overbought or oversold signals are most relevant for swing traders, as they reflect short-term momentum shifts.
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Summary
The broader market continues to trade within a consolidation range, showing signs of caution. Market breadth remains a point of concern as only 25% of stocks are currently trading above their 30EMA and 50EMA, indicating that a significant portion of the market is still struggling to maintain short-term momentum. The aggressive selling trend seen from FIIs earlier in the month has begun to soften, providing the market with room to breathe. Investors and traders will be focusing to the coming week, looking for a ‘follow-through’ to confirm that the Friday’s reversal has the legs to challenge previous resistance levels.